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A modified version of a personal credit card, the business credit card offers a variety of perks and benefits to the small business owner. Here are some of the most common incentives for using a credit card for your own business.
Managing Personal Expenses and Business Expenditures
For the small business owner operating from home, or for those who just need an easier way of separating personal finances from business expenses, a credit card may be the solution to accurately managing both. Besides the detailed monthly reports included with the statements, yearly summaries may be requested or provided that simplify bookkeeping and cut down on administrative costs.
Owners of small businesses who may have several employees who have employee cards on the owner's account are able to quickly monitor spending, and also set individual credit limits for each employee card. Expenses and spending habits can then be sorted by department, making everything from organizing and paying taxes to ordering inventory considerably easier.
Low Interest Rates
A variety of business credit cards offer low interest rates to attract new businesses, with some even offering deals such as 0% for an introductory period of time. Introductory periods, depending on the card, usually last anywhere from as little as three months to as long as a year. The key is keeping track of this period to ensure that either the bill is paid in full to avoid accruing finance charges, or preparing for an adjustment in the monthly amount due.
Some business credit cards also offer attractive grace periods, allowing smaller business to make purchases without worrying about paying the bill in full at the end of every billing period. An account in good standing will usually qualify for a lower interest rate after a certain amount of time. After the introductory period, inquire about any lower available rates for your card rather than switching to another company or opening another account.
While even a small business may need more than one credit card, having too many open accounts often reflects poorly on a credit report, causing future creditors to consider the company a potential risk.
Incentives and Rewards
Nearly all business credit cards offer some type of incentive or reward program, helping cardholders save money and earn discounts on other services or goods. Cash back bonuses are an attractive feature for owners of smaller businesses or entrepreneurs who may have few resources.
Some credit card companies feature promotional periods where every dollar spent earns a point redeemable for future purchases through various merchants. Some of these points may expire after a certain time, so be sure to pay attention to dates, or use a card with no time limits on points earned.
Merchant discounts are yet another incentive for small business owners as many credit cards partner with other companies, often referred to as affiliates, to offer customers discounts on purchases such as office supplies, or travel expenses. Gas rebates and airline travel miles are also common incentive programs for business owners to take advantage of.
Convenience
Since most business credit cards are recognized globally, foreign travel and conducting business in other countries is decidedly more convenient. Also, unlike business checks, credit cards may also be used electronically for purchases made over the internet or telephone, and there's never any time wasted waiting for the checks to clear through international banks.
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